BTMA fears raw material supply crunch

In case of further deepening freight crisis, Bangladesh’s cotton imports may be affected leading to supply shortage of raw materials for the country’s apparel industry during March-April, said Bangladesh Textile Mills Association (BTMA).

BTMA president Mohammad Ali Khokon came up with the apprehension while talking to a group of journalists at his office in the capital on Thursday.

“After opening letter of credit, it used to take two-three months for raw material to reach Bangladesh. But after Covid-19-induced crisis it takes six to eight months,” Mohammad Ali Khokon said.

Mother vessels do not want to come to Bangladesh and they demand higher freight charge, which costs $ 0.03 - $ 0.05 to import per pound cotton. As a result, prices of fabric go up, the business leader argued.

“Shortage of feeder vessels increases the lead time, which discourages shippers to come to Bangladesh. If the freight crises deepen further, we may face problem in importing cotton in time in March-April,” according to Khokon.

“We have bought cotton and opened LC. If the shipment does not reach in time, it would hit production. In case of delay in delivery of imported cotton, it may create supply shortage of raw materials for apparel sector and prices of fabrics may increase.”

The platform of the textile millers urged the government to take necessary steps to increase the number of feeder vessels and remove congestion at ports to ensure smoother delivery of imported goods.

Meanwhile, the BTMA leader expressed hope that cotton imports is going to rise by 9 million bales for the first time as the demand of yarn and fabrics rose with the upswing in work orders in the apparel sector.

Bangladesh imported 8.5 million bales of cotton at a cost of over $ 3 billion in 2021

In H1 of FY22, garment export grew by 28.02 per cent to $ 19.90 billion. Of the total earnings, $ 11.16 billion came from knitwear and $ 8.73 billion from woven products.

Calls to increase EDF ceiling

“In importing cotton, textile millers have to pay $ 0.04 - $ 0.05 cent more for per pound as freight charges have gone up. To adjust the burden of higher price and cost of transportation, the government should increase the amount of Export Development Fund (EDF) to $ 40 million from $ 30 million per unit,” said Mohammad Ali Khokon, also chairman of Makson Group.

It used to cost $ 600 to $ 700 for 40 square meter container from India, which rose to $ 4,000, he exampled.

On the other hand, textile millers have to import cotton from India at higher prices despite having already booked cotton from other countries as it would take more time to reach due to the freight crisis, he added.

On top of that, BTMA also urged the government to allow import of manmade fiber in easy term like cotton to help diversification of goods.